As stock levels continue to tighten in Sydney’s east and north, key pockets of the city’s inner west are emerging as the next targeted locations for investors.
According to Nick Tuxworth of CBRE’s Western Sydney Capital Markets team, a surge of investment activity has recently been witnessed in Sydney’s inner west in the lead up to the end of the year – momentum which is expected to continue into 2017.
“We are seeing no signs of investment activity slowing as we enter the new year, with yields expected to continue tightening regardless of unconfirmed interest rate changes.”
Demonstrating the heated demand for inner west investment assets, a Sydney Olympic Park leasehold property recently transacted for $5.68 million – representing $480,000 above reserve.
Located at 8 Dawn Fraser Avenue, the 432sqm retail site was sold with existing leasehold which has 91 years remaining. The property has been leased to Ribs & Rumps since 2008, providing a stable rental of $334k net per annum.
The sale, which was negotiated by CBRE’s Peter Vines, Nick Tuxworth and Victor Sheu, transacted to a local investor following a heated auction.
“The auction saw multiple local, national and international bidders compete for the site, with buyers attracted to the investment potential of a benchmark leasehold property in Sydney,” said Mr Tuxworth.
In further investor activity for the area, a residential block of units at 11-13 Osgood Avenue, Marrickville, recently transacted following a highly-competitive campaign which saw record interest and over 300 individual enquiries.
The 1,391sqm site, which is located only minutes from Dulwich Hill Station, features 46 studio/one bedroom units. The dated brick property provides strong income stream from multiple tenants and future development upside.
“The enormous value-add potential through renovation made this site particularly appealing to investors, with a local buyer finally acquiring the site. The property further offers the potential to increase rental return or sell down individually (STCA), with investor confidence underpinned by the prime inner west location,” Mr Vines said.
“Investor demand for inner west sites is underpinned by the significant growth the area is expected to undergo over the coming years, with proposed light rail and an enormous current and future development pipeline.”
Further supporting investor demand in the area, Asian buyers are actively looking at the inner west for secure opportunities.
“With the Chinese RMB reaching a record low, now breaking the 1:7 ratio to USD, Asian high net wealth individuals are once again searching for assets to park their funds within the high-performing Sydney market,” Mr Vines said.
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CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
